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The time has come for you to make an offer on your dream home. But before you start signing documents and wondering where to put the television, it's time to get savvy about the offer itself. What goes into the strategy behind making an offer? And what makes sense for you, your finances, and your local real estate market?

Building the Offer

The offer is the beginning of the process that will negotiate all of the moving parts of your home purchase.

As you build your offer, you and your real estate agent should work through all of the details in the original home listing, local market data, and contingencies. If you have a pre-qualification letter, include this with your package. Here are some of the moving parts that will impact making an offer:

  • Original Home Listing: Review what's included and excluded with/from the sale — from property lines and fixtures to appliances and any ongoing fees for the property (like homeowner association dues).
  • Local Market Data: Have your real estate agent pull comparable sales from the area. These "comps" will help you see what similar properties have recently sold for and help you adjust your offer accordingly.
  • Contingencies: Discuss what you will include in the offer to make the sale contingent. Contingencies mean you won't move forward with the sale unless all parties complete tasks like an inspection, appraisal, or certain repairs and improvements. These can also include a contingency that delays closing until your current home sells.

With the above data in-hand, you'll be ready to write a preliminary offer. Before you get started, determine how much you're willing to put down for the offer and what will make you walk away from the deal.

Determining Your Bottom Line

While building your offer, set a budget for how much you can reasonably afford. Set limits with your financial partners and family members for the maximum you're willing to spend.

You'll also want to work with your real estate agent to negotiate the following to your market area and conditions:

  • Inclusions: These are parts of the home that could potentially be removed by the seller such as window treatments, furniture, or appliances. Make sure your offer includes elements you'd like to be included in the purchase price you're offering.
  • Closing Costs: Depending on market conditions and the amount of time a property has been on the market, you might be able to negotiate that the seller pays a portion of closing costs or other common buyer-incurred costs like an appraisal or home inspection.
  • Home Warranty: Home warranties can cover a portion of the costs (minus a deductible) of replacing or repairing costly things in your new home like appliances, air conditioning units, furnaces, or even roofing. As the seller typically chooses the home warranty provider, be sure to review the deductible, coverage, and whether asking for a home warranty in your particular situation would be wise.
  • Contingencies: If a home inspection reveals parts of the home that are out of building code or unsafe, you can negotiate with the seller to have repairs made as a condition of sale. The seller could agree to make the repairs, offer a discount from the sale price in lieu of repairs, or decline the request to make repairs.

Now that you've set the price and know what you would like that price to include, it's time to submit your offer to the seller and begin the final stage of purchase negotiations.

Finalizing Expectations

As you move toward finalizing the offer, there's one final tool you can use as leverage: the closing date. If you find your offer bumping upward in price, think about the seller for a moment. There's the potential that they'd like to close the sale as soon as possible. Speak with your real estate agent and mortgage loan officer about the possibility of offering an accelerated closing date. When comparing two identical offers, a buyer could very likely tip toward the one that would offer the fastest closing potential — especially if they've already found a new home or if they're moving out of state.

With any luck, you'll hear the words "accepted" from your real estate agent in no time. The goal of making an offer is never forgetting the balance between what you're offering and what you'll receive for that financial commitment, your future home.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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